Retail sector nerves lead to further decline in FTSE

The FTSE 100 Index moved closer to its lowest point this year after a profits warning from B&Q owner Kingfisher further unnerved the retail sector today.

Retail stocks were badly affected by the update, which sent Kingfisher shares down almost 7% and left Dixons and Argos owner GUS more than 3% cheaper.

The latest evidence of weakening consumer confidence added to the impact of a poor session in New York, leaving the Footsie 35.1 points lower at 4810.4 by mid-morning. The top flight index, which peaked at 5077 in February, only needs to fall another 50 points to set a new low point for 2005.

The session started on the back foot after fears of a further hike in interest rates in the United States sent the Dow Jones Industrial Average down by 1%.

In London, Kingfisher was the clear leader on the Footsie fallers board, dropping 18.75p to 253.25p following its warning that first quarter retail profits were likely to be 15% lower after a 6% drop in like-for-like sales.

As a result, electricals chain Dixons slipped 6.5p to 138.5p, GUS fell 31p to 840p, Marks & Spencer eased 9.75p to 343p and Next dipped 38p to 1474p.

The weakness among retailers sent investors towards the more defensive sector of utilities as Scottish Power rose 2.25p to 422.25p and United Utilities lifted 3p to 628.5p.

And fears of an economic slowdown continued to depress shares in steel group Corus, which stood 1.75p lower at 45p in morning trading.

There was better news in the FTSE 250 Index as online bank Egg gained 2p to 98p following its announcement that a restructuring of its management team would help it to save £12 million.

Cumbrian brewing company Jennings Brothers also rose 10p to 417.5p after directors agreed to back a takeover by Wolverhampton & Dudley Breweries, which fell 7p to 1033p.